Intergovernmental Group of Experts on Competition Law and Policy. Geneva, 7-9 July 2009

Transcription

1 Intergovernmental Group of Experts on Competition Law and Policy Geneva, 7-9 July 2009 Voluntary Peer Review of the Competition Law and Policy of By The views expressed are those of the author and do not necessarily reflect the views of UNCTAD. 1

2 Supervision of Business Observation on the Peer Review Report Dr. Benny Pasaribu

3 Biggest archipelago country in the world Island : 17,508 Lands : ± 2 million km2 Sea : ± 5.8 million km2 Coastal line : ± 81,000 km Population 228,523,300 people Hundreds of ethnics More than 750 languages & dialects One of biggest democratic country page 3

4 Europe Area : 10,180,000 km2 (3,930,000 sq mi) Population: 731,000,000 people Pop. Density : 70/km2 (181/sq mi) Countries : 50 page 4

5 Rich of Natural Resources No Commodity Production Location Rank in the World 1 Crude Palm Oil 19 million ton (2008) Sumatera, Kalimantan, Sulawesi, Papua. 2 Tin 65 Thousand ton (2007) Sumatera 2 nd 3 Cocoa 770 thousand ton (2007) Sulawesi, Sumatera, Java, Kalimantan, East Nusa Tenggara 1 st 2 nd 4 Copper 818 thousand ton (2006) Papua, Maluku, Nusa Tenggara 5 Nickel 4.35 million ton (2006) Sulawesi, Sumatera, Maluku, Papua 6 Gold 89 thousand kg (2007) Kalimantan, Sumatera, Maluku, Papua 2 nd 5 th 7 nd 7 Coal 178 million ton (2006) Kalimantan, Sumatera, 8 th Source: BKPM, 2009 page 5

6 KPPU Representative Offices Medan Office Batam Office Surabaya Office Makassar Office Balikpapan Office page 6

7 n Economy (1) Economic Structure The total number of business actors in is 51.3 million comprising: million (98.9%) of micro-scale, 0.52 million (1.01%) of small-scale, million (0.08%) of medium-scale and million (0.01%) of large-scale business. These businesses are distributed in various different sectors include: agriculture, animal husbandry, forestry, and fishery (51.5%); trade (28.8%); manufacture (6.3%); transportation and communication (6.25%); services (4.25%); finance and leasing (1.95%); mining (0.5%); electricity, gas, and water (0.34%); construction (0.02%). page 7

8 n Economy (2) The Gross Domestic Product These businesses accelerate s growth domestic product (GDP) to Rp 4,954 trillion (US$ billion), with GDP per capita accomplishing Rp 21,7 million (US$ 2.271,2). In 2009, n economy is expected to grow at 4.5%. page 8

9 Overview on Summary The Commission has cooperated with the Corruption Eradication Commission. Based on the Commission s past experiences, such inter-institution cooperation is helping the effectiveness of competition case handling, in particular when incurring state detriment caused by public officer that lead to corruption infringement. The law n.5 does not authorize the Commission to impose sanction to public officer and therefore coordination with the Corruption Eradication Commission plays an important role. The Commission has actively handled various competition cases such as, cartel, abuse of dominant position, exclusive dealing, etc. page 9

10 The Scope and Application of Competition Law and Policy Element of the n Competition Law The law is divided into four major substantial prohibitions such as agreements, activities, dominant position, and merger acquisition. An independent Commission, the Competition (hereafter refers to the Commission ) is established in Two main tasks of the Commission: enforcing competition law against anticompetitive conduct by business actors and scrutinizing government policy that cause anticompetitive impact on the market. page 10

11 The Scope and Application of Competition Law and Policy The Goals of Competition Policy and Development Multiple objectives of the law that will likely hinder clear objectives of the competition law and may conflicting with each other. The Law n.5 drawn up based on the principles of the State Philosophy and the 1945 Constitution, and it has been based on economic democracy with due observance of equal considerations between the interests of business actors and the public interest and between efficiency and consumers welfare with the main aim to improve welfare and living standards of the people. Those objectives are not conflicting. As in many other jurisdictions, the objectives were set based on n socio-economic condition where effort is placed to promote efficiency and safeguarding public interest as part of efforts to improve people welfare. page 11

12 The Scope and Application of Competition Law and Policy Substantive Analysis Issue Question has arisen on the issue of definition of concept and the application of per se and rule of reason approach. This has not cause significant problem since in implementing this Law, the Commission has been given the mandate to interpret the Law accordingly. Once this interpretation is accepted by the court, the Commission will continuously use the same approach in implementing those laws henceforth. This practice is also extended when there is a multiinterpretation of the law as well as the issuance of related guidelines. page 12

13 The Scope and Application of Competition Law and Policy Procedural Issue The absence of dismissal procedure where the Commission accordingly is obliged to follow up every complaint submitted regardless the gravity and urgency of other complaints. The Commission tried to ease this situation by introducing delegation of authority to the Secretariat where Commissioners saved from examining small cases based on criteria stipulated by the Commission. The quorum in deciding a case does not represent the majority of Commissioners and therefore raise the question of the validity of the decision. The current procedural law divides Commissioners into separate independent panel that will examine each case. The minimum member of panel is three Commissioners and therefore should not be confused with the minimum number of Commissioners according to the law. page 13

14 The Scope and Application of Competition Law and Policy Sanctions The Commission has the power to impose criminal sanctions. the Commission is equipped with duties and clear authority to conduct supervision of business competition and to impose sanctions. Such sanctions shall be in the form of administrative measures, whereas criminal sanctions shall be under the authority of the criminal court originating from the public prosecution offices. page 14

15 The Scope and Application of Competition Law and Policy Merger Review Pre-merger notification program is promulgated in May The pre-merger notification basically regulate threshold for business actors willing to do MCA action. The report mentioned that merger provision in Law n.5 giving the KPPU complete freedom to interpret the Article as prohibiting all mergers and acquisitions regardless of effect. Need to be clarified that merger provision in the Law clearly states that the only mergers that will be prohibited are those causing anti-competitive impact. page 15

16 The Scope and Application of Competition Law and Policy Judicial Review The weaknesses of judiciary role in implementing the law. The Commission is sustainably working on these specific issues. Regular training for judges, seminars and others meeting with judiciary bodies are continuously to be developed. Low level of compliance from business actors to carry out sanction imposed by the Commission. The law and n legal system place great deal of authority to enforce those sanctions to the judiciary bodies rather than to the Commission. The Commission persistently seek the court order to have the commission s sanction complied by the business actors. The Commission is also contemplating other available legal action in assuring the effectiveness of each commission s decision. page 16

17 The Scope and Application of Competition Law and Policy Judicial Review (2) The sanction in many instances are ineffective due to the limitation of maximum amount of fine stipulated in the law which is too low and therefore failed to create deterrence effect of the infringement. The commission tackles this issue by rendering non-financial sanction but similarly creates deterrence effect on the infringement, such as prohibition from participating in public procurement for a certain period of time. Peer pressure and media coverage also provide social deterrence, so as to deter business actors from continuing anti-competitive practice. page 17

18 The Scope and Application of Competition Law and Policy Exemptions: Article 50 The exemptions are very broad exemption and not limited to small scale business. Therefore they are offering the possibility for the firms to be structured in a way to bypass the competition law. The Law n.5 should apply to all sectors and companies in. Some types of exemptions need to be granted for social, economic and political reasons. The granting of exemption does not necessarily imply the weakening of competition law enforcements. It may well be that such exemptions are necessary for furthering the objectives of competition law. The exemptions cover among other cooperatives and small and medium enterprises. The cooperative exemptions however are only applied on activities intended to serve its members. page 18

19 The Application of Competition Law Institutional The independency of the Commission in connection with political party. It should be noted that the selected Commissioners are the output of political process through the Parliament. That is not a problem because all Commissioners are experts in the field of competition. The Commission independency is maintained through the application of standard operating procedure in any decision making process. This procedure specifies that any policy must be made under a collective decision. page 19

20 The Application of Competition Law Institutional (2) The possibility of parliament intervention into the Commission independency through budgeting system. In that sense, the 1945 Constitution provides a budget right to the Parliament, thus the budget of any state financed institution (including the Commission) has to be approved by the Parliament. This does not necessarily entails intrusion by the Parliament since the Commission decision is fully independent and can not by altered in anyway by the Parliament which has a different function like in all democratic country. A system of check and cross check by the general public, in a full democratic country like, with an open and transparent press/media ensures public scrutiny by all layers of society. page 20

21 Competition Advocacy Retail Sector Issue of competition between traditional and modern market in connection with the Government policy on zonation and term of trade. The law No. 26/2007 authorizes local government to regulate zonation based on master plan of regional or city development, and is intended to manage spatial plan in the context of regional development. KPPU supported the zonation policy because this policy guarantees equal opportunity to every business actors without restricting consumers from choices. KPPU also has provided approximately 67 policy recommendations most of them are accommodated by the government for policy changes page 21

22 International Cooperation Continuous Cooperation from Partners and Donors Capacity building of the Commission has been facilitated by bilateral cooperation with the German Bundeskartellamt, United States Federal Trade Commission, Japan Fair Trade Commission, Korea Fair Trade Commission, Chinese Taipei Fair Trade Commission, and the Australian Competition and Consumer Commission. The Commission is also benefited by cooperation from APEC, ASEAN, IJEPA, and AANZ-FTA. Multilateral assistance came from the UNCTAD, APEC, OECD, and European Commission, while international donors came from GTZ, JICA, US Aid, ADB, AusAid, World Bank, and KOICA. The Commission involves in OECD programs as enhanced engagement country (apart from Brazil, China, Russia, etc.) since 2009 after two periods of regular observer at the OECD Competition Committee. Besides, the Commission is also member of the International Competition Network (ICN) and the East Asia Competition Forum. page 22

23 International Cooperation KPPU, a Leading Competition Authority in South East Asia In 2003, the Commission has initiated the first regional conference in competition policy. This conference resulted on the birth of the ASEAN Consultative Forum on Competition (ACFC). This forum then transformed to be the ASEAN Expert Group on Competition, a formal working group under the ASEAN Secretariat aiming at promoting regional competition policy. The Commission also endorses the role of a private organization in regional competition policy development, which in turn resulted in the establishment of a private regional competition organization of so called, the ASEAN Competition Institute (ACI). The Commission has organized as host country to more than 10 international events. page 23

24 Latest Development Since February 2009 Seven new guidelines, namely guideline for franchise agreement, competition and Intellectual Property Right (IPR), monopoly by state-owned enterprises, administrative sanctions, relevant market, exemptions based on the existing laws and regulations, and pre merger notification guidelines. The Commission will operate independent budget in The Commission has strengthened internal code of conduct of Commission to replace the previous version, which introduces an independent ad hoc tribunal. The Commission is in the process of drafting Memorandum of Understanding (MoU) with the National Police and the Audit Board of. The Commission is encouraging Presidential Candidates to sign a Pact on Fair Business Competition. page 24

25 Findings and Possible Policy Options Some of those recommendations have already carried out by the Commission. These include; focused guidelines, program to combat cartel other than collusive tender, regular publication, program to strengthen the secretariat, the material of internal handbook, establishment of internal library, enactment of regulation pre-merger review, advocacy directed to business community, and simple and quick handling procedure for small bidding conspiracy cases. In addition, the Commission considers to propose the draft of the amendment of the Law, so as to further improve the effectiveness of competition with the objective of improving welfare and prosperity. page 25

26 Thank your for support page 26